Harmonising a framework for benchmarks across Europe—Benchmarks Regulation—ten key points to note
Harmonising a framework for benchmarks across Europe—Benchmarks Regulation—ten key points to note

The following Financial Services guidance note provides comprehensive and up to date legal information covering:

  • Harmonising a framework for benchmarks across Europe—Benchmarks Regulation—ten key points to note
  • 1. Background to the Benchmark Regulation
  • 2. Objectives of the Benchmarks Regulation
  • 3. Scope of the Benchmarks Regulation
  • 4. Definition of ‘benchmark’
  • 5. Types of benchmarks
  • 6. Authorisation of benchmark administrators
  • 7. Contributors to benchmarks
  • 8. Enforcement powers relating to the Benchmarks Regulation
  • 9. Impact of the Benchmarks Regulation
  • more

The Benchmarks Regulation was published in the Official Journal on 29 June 2016 and came into effect on 30 June 2016. Most of its provisions applied from 1 January 2018.

1. Background to the Benchmark Regulation

The Benchmarks Regulation is part of the EU’s response to the manipulation of LIBOR, investigations into energy, oil and foreign exchange benchmarks and international developments such as the International Organization of Securities Commissions' (IOSCO) July 2013 report on ‘Principles for Financial Benchmarks’. Shortcomings in the accuracy and integrity of the creation and distribution of benchmarks have led to a lack of confidence in the market and losses to customers and investors have underlined the need for further regulatory controls for benchmarks.

The Benchmarks Regulation is widely seen as a much more radical step forward by the EU in the regulation of benchmarks than its international peers.

In advance of the Benchmarks Regulation’s application, the UK was the frontrunner in choosing to regulate a very broad class of benchmarks. In summer 2014, the Fair and Effective Markets Review recommendations brought a further seven major UK-based fixed income, currency and commodity (FICC) benchmarks into the scope of UK legislation originally put in place to regulate LIBOR. In June 2015, the Financial Conduct Authority (FCA) published its fair, reasonable and non-discriminatory (FRAND) access to regulated benchmarks by benchmark administrators